Measuring climate progress ton by ton

Mounting climate pressure underscores challenges ahead

It is not often, and in fact rare, that we’re presented with overwhelming evidence of meaningful progress in combatting the challenges of climate change.  In fact, to the contrary, scientific research and climate news tends towards the grim realities of society’s predicament.  In the pure pursuit of improved livelihoods and economic growth, the quest for climate stability becomes elusive – the earth gets warmer while investment in adaptation and mitigation measures struggle to keep pace.

Since the Copenhagen agreement in 2009, scientists have been warning us we must stabilize global emissions by 2020. More precise reporting on climate change and its related effects have only underscored the gravity of the situation:

• 2014 was the warmest year in recorded history (14 of the 15 warmest years have all been in the 21^st century). In 2013 alone, 41 weather events caused at least $1 billion each in damages
• In May 2013, atmospheric CO2 reached historically unprecedented levels, passing 400 parts per million.
• Seal levels rose more in the 20th century than they have in any century in the last 6,000 years.

It’s clear that the window to effect positive climate change is closing — and fast.  Still there are encouraging developments. The US and China, the world’s largest emitters, agreed to an ambitious joint plan to curb emissions, the United Nations Green Climate Fund surpassed US$10 billion in pledges; and the latest international climate talks in Lima, Peru, resulted in a framework for nations to establish their commitments to mitigate emissions.

But against these commitments, how do we translate promise into progress and take stock of our efforts to measure performance? A number of new tools have recently been released including expanded use of the IDB’s GHG calculator to measure GHG savings in the projects we finance.

Taking stock of emission avoided –

Tracking GHG emissions has been a cornerstone of efforts to understand the scale of the challenge, and inform policy and investment decisions.  New tools are telling the flip side of the story by measuring GHG emissions avoided (rather than GHG emissions emitted) that result from investments in renewable energy and energy efficiency projects in particular. The World Resources Institute, credited with developing the Greenhouse Gas Protocol—the gold standard in measuring, managing, and reporting GHG emission—released at the end of 2014 the Mitigation Goal Standard and the Policy and Action Standard.  Both tools give guidance on the savings side of the equation, allowing policymakers and analysts to define mitigation targets, and subsequently measure progress in meeting these goals.

The IDB has also been at the forefront of developing tools to measure the GHG emissions generated, and reduced, from the projects we finance.  The IDB’s GHG Calculator includes 16 different sector-specific calculators and has been in use since 2009.  Our annual Sustainability Report illustrates rolling progress on the gross and net emissions resulting from the projects we finance.

Of the 168 operations approved in 2014, 59 warranted additional GHG analysis. Of these 59 projects, nine resulted in CO2 emissions reductions— which combined, was greater that the total amount of CO2 emissions generated by the other 50.  Three wind projects in Peru and Uruguay accounted for 48% of the total emission reductions. The nine projects also included:

• a biomass cogeneration power plant in Brazil that uses eucalyptus and pine as feedstock;
• wind farms in the coastal area of Nazca in Peru; and
• solar photovoltaic power plants in the Atacama Desert and Uruguay.

We now have a better sense of the GHG emissions in the projects we directly finance — In 2014, IDB’s projects resulted in more emissions avoided than emissions generated—and we’re looking more closely at our indirect lending activities. The Bank channels approximately 12% (or US$1.64 billion) a year through financial intermediaries (FIs). Essentially the IDB provides financing to Banks and other institutions, which on-lend much needed resources to smaller clients, often at a scale that IDB is incapable of lending to directly. In particular, the IDB has been developing ‘Green Line’ credit lines, providing funding for small scale renewable energy and energy efficiency projects, among others.  With 18 approved green lines to date, the Bank is working closely with its clients to share its experiences using the GHG calculator to measure climate progress.

As a pilot in this effort, IDB and Banco Itau in Brazil—the recipient of a US$100 million regional green credit line in 2012—did the math on the 12 “green line” sub-projects that Itau financed to date with IDB proceeds. The results demonstrate that these projects, which range from a co-generation facility in Chile, to wind farms in Brazil will result in approximately 55,000 tons of avoided emissions annually, the equivalent of removing 11,000 cars off the road. This is just the beginning. The hope is to roll the calculator out to many other IDB FI clients in the long run, and that in turn the FIs will expand their calculations to their entire portfolio, to help better understand the positive and negative climate impacts of their investments.

As IDB continues to deploy its GHG calculator and build capacity among its banking clients on how to measure climate progress, we remain hopeful that the region can seize climate opportunities  and continue demonstrating collective progress ton by ton.